Summary: Yesterday the Supreme Court reversed 50 years of abortion rights established by Roe v. Wade. This attack on reproductive rights and health is an integral part of a broader half-century undermining of our democratic system. The fights to save democracy and provide universal healthcare are linked.

Letters from an American, June 24, 2022, by Heather Cox Richardson

At yesterday’s hearing of the House Select Committee to Investigate the January 6th Attack on the U.S. Capitol, we heard overwhelming proof that former president Trump and his congressional supporters tried to overturn the will of the voters in the 2020 presidential election and steal control of our country to keep a minority in power.

Today, thanks to three justices nominated by Trump, the Supreme Court stripped a constitutional right from the American people, a right we have enjoyed for almost 50 years, a right that is considered a fundamental human right in most liberal democracies, and a right they indicated they would protect because it was settled law. Today’s Dobbs v. Jackson Women’s Health Organization decision overturned the 1973 Roe v. Wade decision that recognized a woman’s right to terminate a pregnancy. For the first time in our history, rather than conveying rights, the court has explicitly taken a constitutional right away from the American people.

These two extraordinary events are related. The current-day Republican Party has abandoned the idea of a democracy in which a majority of the people elect their government. Instead, its members have embraced minority rule.

The Dobbs decision marks the end of an era: the period in American history stretching from 1933 to 1981, the era in which the U.S. government worked to promote democracy. It tried to level the economic playing field between the rich and the poor by regulating business and working conditions. It provided a basic social safety net through programs like Social Security and Medicare …

Now the Republicans are engaged in the process of dismantling that government. …

[The Dobbs decision argued] that the right to determine abortion rights must be returned “to the people’s elected representatives” at the state level, even as states are restricting the right to vote. …

We are still waiting on another potentially explosive decision in West Virginia v. Environmental Protection Agency, in which the court will decide if Congress can delegate authority to government agencies as it has done since the 1930s. If the court says Congress can’t delegate authority, even if it waters that argument down, government regulation could become virtually impossible.

Comment:

By Jim Kahn, M.D., M.P.H.

Make no mistake about it, yesterday’s Supreme Court decision to reverse Roe v. Wade, clearly an attack on reproductive health and women’s rights, is also integral to a broader attack on democracy. It is latest development in a decades-long concerted effort to deconstruct the federal assertion and protection of rights that started in earnest with FDR 90 years ago, and to exploit our biased electoral system to empower a minority to implement that agenda. The latest twist, we are reminded in the January 6 Congressional hearings, is that the GOP is willing to use big lies and subversion of basic democratic processes to complete their slow coup. Heather Cox Richardson, as usual, sees all the connections. I encourage you to read her full post.

Single payer is profoundly pro-democratic, as I’ve repeatedly written in HJM. It is universal, equitable, economically leveling, and guided by representatives of the people not of corporate shareholders. Thus, the fight for universal healthcare and for real democracy have linked core values. I believe that mending our health care financing will help mend our fractured democracy. But are these two goals linked strategically? Does the fight for single payer bolster efforts to preserve democracy? Does preserving democracy tactically advance the single payer cause? My intuition says yes, but I don’t yet understand the integrated battle plan. I’ll revert on that.

I’ll close with a reminder that this is not just about governance and human rights, it’s also about life and death. Ample research demonstrates that restricting access to abortion raises maternal and even infant mortality. The new decision and subsequent state actions to restrict or ban abortion will cause many hundreds of added deaths per year. The evidence can be seen here, here, here, here, and here.

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Summary: CMS promised that the Medicare REACH ACO program, which supplants Direct Contracting Entities as a capitated replacement of fee-for-service Medicare, would prevent using diagnostic upcoding to drive up payment rates as seen with Medicare Advantage. However, scrutiny of recent guidance to contractors, combined with past CMS regulatory failures, suggest extreme skepticism.

CMS REACH ACO Financial FAQs, Dated April 2022; Downloaded June 2022

Q: What is the purpose of the Coding Intensity Factor (CIF) and the ACO-level symmetric 3% cap in risk adjustment?

• Coding Intensity Factor (CIF). The retrospective CIF will ensure that the change in normalized risk scores across all claims-aligned beneficiaries is zero between the baseline year (2019) and the PY. It will be applied uniformly across ACOs for a given risk adjustment model.
• Symmetric 3% cap. A symmetric 3% cap will be applied to ACO-specific risk score growth only for Standard and New Entrant ACOs in PY2021 and onwards, and beginning in PY2024 for High Needs Population ACOs, if significant risk score growth is observed. Risk score growth will be determined at the ACO-level and the symmetric 3% cap applied for each PY relative to an annual rolling risk score reference year. However, starting in PY2024, the application of the symmetric 3% risk score cap will be modified to: 1) adopt a static reference year population for the remainder of the model performance period (as a substitute for the rolling reference year population), and 2) cap the ACO’s risk score growth relative to the ACO’s independently calculated demographic risk score growth …

Comment:

By Jim Kahn, M.D., M.P.H.

What does this technical mumbo-jumbo mean? Well, CMS and MedPAC acknowledge that the Medicare Advantage program has been plagued by rampant diagnostic upcoding, as compared with traditional Medicare, and inadequate corrective action is leading to hundreds of billions in overpayments to private MA insurers.

So, for the REACH ACO program (rebranded DCEs) CMS promised to hold the diagnostic risk score to a reference year, presumably at the start of the program. No upcoding, they said.

Then come the details. The devil is always in the details.

The first bullet is tricky. What’s key to understand is that “normalized” means counting only the coding growth that exceeds traditional Medicare coding growth. So, it’s not zero coding growth, it’s zero compared with some reference growth rate. But how will that growth rate be calculated? When assessing Medicare Advantage over-coding, the reference comparison was clear – traditional Medicare. Yet REACH ACOs are displacing traditional Medicare. So is the reference the remaining un-REACHed corners of traditional Medicare? Or all of traditional Medicare, including the REACH parts, which leads to a self-referential paradox?

The second bullet says that each ACO will be permitted an annual growth of 3% in risk score, compared with the prior year. That’s huge. Is it 3% absolute, or 3% above “normalized” growth? Critically, the promised static “reference year” kicks in only in 2024, just two years before the program ends. And, if the program changes before 2026, it won’t even happen. Oops, the actual implementation drops the reference year promise. Just like that, poof, gone!

If you’re confused, you’re not alone. I certainly am. The language used obscures as much as it clarifies.

What we’ve seen with Medicare Advantage is that even with crystal clear rules, the insurers influence Congress and CMS to inadequately adjust for known MA over-coding. This failure shifts billions from the government and beneficiaries to insurance stockholders.

Two additional issues:

Note that there’s a separate “demographic” adjuster – another opportunity to increase payments and profits.

And, as we’ve noted before, with the tempting prospect of keeping 100% of the first 25% in savings, REACH ACOs will work hard to suppress utilization, via care denials, “lemon dropping”, and other techniques.

Gilfillin and Berwick recently re-iterated concerns that the corporate nature of REACH ACOs will exacerbate profiteering gaming. These worrisome risk adjustment details compound that fear.

I predict that if REACH continues, within 3-5 years we will see in technicolor how these complex and squishy rules provided the opportunity for ACO contractors to increase payment rates, decrease outlays, and generally fleece the government and Medicare beneficiaries of hundreds of billions of dollars. One could call it, I suppose, my “Exploitation Expectation”.

It’s imperative that REACH is stopped; inserting corporations into traditional Medicare is a travesty.

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Summary: Health savings accounts (HSAs) paired with deductibles are regressive: they yield financial gains mostly for healthy individuals with high income. They are justified as reducing health care costs, but these benefits are minimal. Now that large deductibles are widespread, any pretense of HSA cost-control is gone. When will we end this tax break for the rich?

Health Savings Accounts No Longer Promote Consumer Cost-Consciousness, Health Affairs, June 2022, by Sherry A. Glied, Dahlia K. Remler, and Mikaela Springsteen

Abstract:

Two decades ago Congress enabled Americans to open tax-favored health savings accounts (HSAs) in conjunction with qualifying high-deductible health plans (HDHPs). This HSA tax break is regressive: Higher-income Americans are more likely to have HSAs and fund them at higher levels. Proponents, however, have argued that this regressivity is offset by reductions in wasteful health care spending because consumers with HDHPs are more cost-conscious in their use of care. Using published sources and our own analysis of National Health Interview Survey data, we argue that HSAs no longer appreciably achieve this cost-consciousness aim because cost sharing has increased so much in non-HSA-qualified plans. Indeed, people who have HDHPs with HSAs are becoming less likely than others with private insurance to report financial barriers to care. In sum, promised gains in efficiency from HSAs have not borne out, so it is difficult to justify maintaining this regressive tax break.

Comment:

By Don McCanne, M.D.

After two decades, conservatives are still promoting health savings accounts, in spite of their pronounced regressivity. We have long needed policies that assist lower income individuals, yet health savings accounts and their associated high deductible health plans have failed to protect those with more modest incomes. Only a well-designed single payer Medicare for All system would. So why on earth does support for this unsuccessful policy persist when it works to the detriment of the poor but not the wealthy?

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Summary: Juneteenth commemorates an 1865 US army order to end slavery in Texas. Emancipation was the first essential step to offer Black Americans the opportunity to live a free and healthy life. But even today, 157 years later, the well-being of people of color is compromised by numerous post-emancipation policies that disadvantage them. We offer a framework to understand these issues and advocate for change.

Comment:

By Jim Kahn, M.D., M.P.H. and Susan Rogers, M.D.

Systemic racism in health is the constellation of policy decisions taken within health care as well as in other policy domains that affect health, regardless of the purported mindset of decision-makers and practitioners. Overt racist intent (e.g., denying Black individuals the same rights as White individuals) is unacceptable and deeply harmful, but is not required for racist consequences. Indeed, many broadly harmful policies derive from racist perspectives dressed up to appear beneficent (e.g., providing inferior public services when the likely users are people of color). What makes racism “systemic” is that structural features foster unequal treatment and outcomes.

Our framework for understanding systemic racism in health starts with health care, including insurance and delivery of care. It then proceeds to broader domains that less obviously, but indeed powerfully, influence health. Our effort in this post is broad, with a few citations. It should not be taken as a definitive academic review on the topic. Instead, we hope it helps clarify the challenges we face in order to reduce and end systemic racism in health.

A note on terminology. Observed differences are often described as “disparities,” which has a neutral tone. We prefer “inequities,” which highlights that these differences are unjust and unfair.

Health insurance: Black and Latino Americans are less likely to be privately insured, and more likely to be uninsured or Medicaid-insured. This is the insurance structure that predisposes them to health care access problems. Our public policy tolerance of low payment rates and poor access under Medicaid differentially harms people of color, and in so doing reveals a fundamental and unacceptable disregard for their welfare.

The Affordable Care Act reduced uninsurance inequities, via the Medicaid expansion. However, the 13 non-expansion states have high Black and Hispanic Medicaid participation, including five of the ten highest states by this metric. Thus state refusals of federal money to expand Medicaid disproportionally hurt people of color.

Inequities in coverage worsened during COVID.

Historical Origins: 20th century health insurance expansions, including the lack of universal coverage, were shaped substantially by the linked issues of states’ rights and racism. Medicaid design and implementation compromises were similarly influenced.

Access to care: Blacks and Latinos are more likely to experience financial barriers to care. This derives from higher rates of uninsurance and Medicaid. In the Medicare program, lower income and race interact to create higher rates of skipped or delayed care. In addition, there are geographic barriers: often no hospitals, clinics, or pharmacies in poor and rural neighborhoods.

Health workforce: People of color are under-represented in the most prestigious professional group in medicine – physicians. Even worse, they remain under-represented among medical students, so the physician mix is not evolving. The American Medical Association excluded blacks until the 1965 passage of Medicare, which desegregated hospitals. A wide variety of racist attitudes and behaviors continue in clinical practice.

Pain management: One often-mentioned issue is different attitudes and use of narcotic pain relief for Black patients, with an example here. This problem is especially difficult to read about for sickle cell anemia, with its excruciating sickle crises.

Quality of care: The literature on race and quality of care is massive. A PubMed search turned up 1,700 systematic reviews, and 200,000 articles. The issue pervades medicine.

Now we discuss issues apparently outside the health realm. Yet they influence health care and health in profound ways.

Law enforcement & incarceration: Our criminal justice system is biased against people of color at all steps: stops, arrests, convictions, and severity of punishment. Blacks and Latinos are vastly over-represented in prisons. The high rate of incarceration creates a “prison penalty” which impairs employment. This, in turn, reduces access to private insurance, among other harms.

Living in areas with concentrated poverty: Blacks are more likely to be poor than are whites. However, the elevated risk of living in areas of concentrated poverty – with scarce resources like supermarkets, well-funded schools, and health care, and greater environmental toxicity – is even greater. Blacks are five times more likely than whites to live in concentrated poverty, 10 times in some cities, and even non-poor Black families are 1.5 times as likely as poor White families to live in concentrated poverty.[1]

Public funding to get ahead: The GI bill after World War II paid for higher education for returning soldiers – if white; black soldiers were mainly excluded. Federal mortgage guarantees were “red-lined”: excluding high risk (read: mainly black) neighborhoods. As a result, Black families were denied the leg up needed to establish family financial stability. Wealth differences are massive by race. This contributes to a greater medical debt burden.

Health effects: Life expectancy is >3 years greater for White than Black babies. At age 60, the difference is 1 year. Both differences increased with COVID, which had much higher death rates among Black than White individuals.

We’ve said it before, and we’ll keep saying it: single payer universal health care will help end inequity in health insurance and thus largely in access. The phrase “health insurance program for the poor” will no longer have meaning. Being Black or Hispanic will no longer feed an “algorithm” to rank health insurance attention to underserved populations. Instead, it will mean that person deserves excellent universal health insurance, just like everyone else.

We should rejoice that the federal government has designated Juneteenth as an official holiday. We have a lot more work to do.

Dr. Susan Rogers is president of Physicians for a National Health Program.

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Summary: A new survey on health care debt quantifies its very high prevalence (41%) and the dire consequences for individuals and families: financial insecurity, reduced access to health care, and being unable to “provide a good life.”

Health Care Debt In The U.S.: The Broad Consequences Of Medical And Dental Bills, KFF (Kaiser Family Foundation), June 16, 2022, by Lunna Lopes, et al

Executive Summary:

… The KFF Health Care Debt Survey finds that four in ten adults have some form of health care debt. Yet the likelihood of having health care debt is not evenly distributed. Uninsured adults, women, Black and Hispanic adults, parents, and those with lower incomes are especially likely to say they have health care-related debt.

… Most adults with health care debt say the bills that led to their debt were from a one-time or short-term medical expense, which are often unexpected. Indeed, about half of adults … would be unable to pay a $500 unexpected medical bill without borrowing money. …

In their efforts to service or pay off their debt … many report serious consequences like skipping payment on other bills, delaying college or buying a home, or changing their housing situation as a result of their debt.

… These sacrifices have left some individuals feeling as if they could not provide a good life for their families, or with a general sense that they will never be able to extricate themselves from debt. Other reported … being contacted by debt collectors and having their credit scores negatively affected, can lead to additional financial problems such as difficulty buying vehicles needed for work or buying or renting a home.

Health care debt can also affect the ability of individuals to access needed medical or dental care. One in seven adults with health care debt say they have been denied care by a provider due to unpaid bills. In addition, adults with health care debt are more than twice as likely as those without debt to say they or someone they live with have postponed or skipped getting needed health care because of the cost.

[T]hose with lower incomes and people of color (particularly Black adults) are more likely to report being contacted by collection agencies due to health care debt, being denied subsequent care, and making difficult sacrifices like changing their housing situation to pay down their debt.

Comment:

By Jim Kahn, M.D., M.P.H.

Read this report! KFF did a thorough national survey, and wrote about it clearly and powerfully.

Medical debt statistics are frightening, even for someone like me so familiar with our insurance system’s flaws – how pervasive the problem is, and how severe the consequences for families. It undermines the American dream of economic security and the “pursuit of happiness” from our Declaration of Independence. As we approach Juneteenth, note that Black Americans are especially severely affected.

The situation is, of course, completely inexcusable. And completely remediable – Single payer.

To help you absorb the findings, here’s a summary of the figures. See especially Figs 9, 12, & 16 on consequences. (But read the report!)

• Fig 1: 41% of US adults have medical debt
• Fig 2: Most likely to have debt: Uninsured, Parents, Lower income, Black & Hispanic, Women
• Fig 3: Medical debt is about half <$2500 and half >$2500
• Fig 4: About half expect debt to last 3+ years, 25% forever among the poor
• Fig 5: Debt is mostly due to short-term expenses
• Fig 6: From Diagnostic tests, Doctors, Emergencies, Dental, Hospital stays, Drugs, Ambulances
• Fig 7: Causes similar across age groups
• Fig 8: Reasons: Thought insurance would pay, not enough money, possible bill inaccuracy
• Fig 9: 63% reduced spending on household necessities, and 1/5 – 1/2 did each of these: used up savings, increased credit card debt, worked more, skipped other bills, delayed education or home purchase, took out a loan, sought charity aid, moved in with family or friends
• Fig 10: Lower income: all those percentages are higher
• Fig 11: 54% made “difficult sacrifices”
• Fig 12: 47% contacted by collection agencies, 35% lower credit score, 6% sued, 3% bankruptcy
• Fig 13: 66% of Blacks contacted by collection agencies
• Fig 14: 46% of Blacks lower credit score
• Fig 15: 15% denied care by medical provider due to debt
• Fig 16: 79% with debt skipped or delayed care or drugs due to cost (and 49% without)
• Fig 17: Half would be unable to pay an unexpected $500 medical bill
• Fig 18: 68% support government limits on out-of-pocket costs
• Fig 19: 71% would like consumer assistance programs

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Summary: Stellar health system modeling and empirical analysis together quantify what many of us suspected all along – the huge uninsured problem in the U.S. increased the COVID death toll by reducing access to care. Fully one quarter of all COVID deaths are due to the absence of universal insurance.

Universal healthcare as pandemic preparedness: The lives and costs that could have been saved during the COVID-19 pandemic, PNAS (Proceedings of the National Academy of Sciences), June 13, 2022, by Alison Galvani et al.

Abstract: The fragmented and inefficient healthcare system in the United States leads to many preventable deaths and unnecessary costs every year. During a pandemic, the lives saved and economic benefits of a single-payer universal healthcare system relative to the status quo would be even greater. For Americans who are uninsured and underinsured, financial barriers to COVID-19 care delayed diagnosis and exacerbated transmission. Concurrently, deaths beyond COVID-19 accrued from the background rate of uninsurance. Universal healthcare would alleviate the mortality caused by the confluence of these factors.

To evaluate the repercussions of incomplete insurance coverage in 2020, we calculated the elevated mortality attributable to the loss of employer-sponsored insurance and to background rates of uninsurance, summing with the increased COVID-19 mortality due to low insurance coverage. Incorporating the demography of the uninsured with age-specific COVID-19 and nonpandemic mortality, we estimated that a single payer universal healthcare system would have saved about 212,000 lives in 2020 alone.

We also calculated that US$105.6 billion of medical expenses associated with COVID-19 hospitalization could have been averted by a single-payer universal healthcare system over the course of the pandemic. These economic benefits are in addition to US$438 billion expected to be saved by single-payer universal healthcare during a nonpandemic year.

Results: Across the entire time frame of the pandemic thus far … 338,594 COVID deaths are attributable to incomplete insurance coverage in the United States.

Exacerbation of COVID-19 mortality by the fragmented United States healthcare system: A retrospective observational study, The Lancet Regional Health – Americas, May 12, 2022, by Travis Campbell et al.

Summary

Background: … Comparing regions with different rates of health insurance, we assess how much of this excess mortality may be due to the relatively large population without health insurance.

Methods: We use daily COVID surveillance data from the US Centers for Disease Control and Prevention (CDC) stratified by region, age group, gender, and race in regression analysis of cases, hospitalization, and mortality. COVID-19 data have been matched with structural characteristics of the region including average proportion with health insurance.

Findings: Groups with lower health insurance coverage had significantly higher mortality as well as greater case counts and hospitalization. Early in the pandemic, they were also less likely to be tested for COVID-19. Applying our regression estimates, we estimate that had there been full health insurance coverage of the population, there would have been … a 26% [lower] death toll ….

Interpretation: Our study demonstrates that a significant share of COVID-19 mortality in the United States … is due to our reliance on a system of market-driven healthcare.

Comment:

By Jim Kahn, M.D., M.P.H.

This important pair of studies (disclosure: I’m a co-author on one) demonstrate using state-of-the-art scientific methods the shocking extent of excess U.S. COVID mortality due to lack of health insurance. One third of a million unnecessary deaths, and still rising.

We have written in HJM about how poorly the US has fared with COVID compared with Taiwan and other countries. We’ve speculated on the role of poor access to primary care, driven by lack of insurance and thus financial barriers.

Now we have a firm numerical estimate, using empirical analysis of COVID surveillance, plus integration of these and other data into a comprehensive portrayal. Speculation is replaced by quantification of the huge health consequences of our insurance gaps.

The system portrayal also demonstrates that our healthy system wasted more than half a trillion dollars in 2020, between ongoing inefficiency and care for excess COVID cases.

What are the mechanisms? Health care access leads to earlier diagnosis, with better treatment and reduced transmission, as well as stronger prevention such as higher vaccination rates. (Promises of special insurance coverage for COVID fall short when individuals don’t know about it, and when implementation is seriously flawed.) Fewer cases also mean lower hospital burdens that may compromise quality of care.

Can the COVID experience tip the scales toward single payer? Let’s use these sad statistics to achieve great reform. Future pandemic responses should not be hindered by insurance frailties.

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Summary: This week the US Congress televised an extremely compelling hearing on the January 2021 Capitol riot and coup attempt. It may nudge our country toward re-asserting democracy. We need something similarly powerful for single payer.

January 6 hearings: Watch first public House committee hearing on Capitol attack, Streamed live on June 9, 2022, USA TODAY

Stephen’s LIVE MONOLOGUE After The January 6th Committee Primetime Hearing, The Late Show with Stephen Colbert, June 9, 2022

Comment:

By Jim Kahn, M.D., M.P.H.

We saw on Thursday how to effectively address a major political issue using public hearings in the US House of Representatives. The topic was, of course, the Jan 6, 2021 attack on the Capitol, engineered by the then President to try to reverse his November 2020 electoral defeat. The future of US democracy is at stake. The hearings combined new information, insider debunking of the election fraud narrative, forceful oratory and affecting video footage, and testimony (both live and recorded) to powerfully advance truth and the integrity of our governance system. You can watch the full two hours, or Stephen Colbert’s excellent 10-minute summary.

The House learned well from special counsel Robert Mueller’s halting and ineffective 2019 testimony about his team’s investigation into Russia’s interference in the 2016 elections. In pleasing contrast, this week’s event was properly and professionally handled as a critical opportunity to persuade the American people. Compelling revelations were delivered using equally compelling production values. It was a spectacle suited to the critically important issue.

How would a similar spectacle look for single payer?

Here are a few ideas. (Disclaimer: I’m definitely not a TV producer. I hereby invite a real TV producer to jump in and take over.)

• Frame as a truly critical issue for our country. Shouldn’t be too hard: our health is suffering, with longevity falling, and our financial security is constantly at risk.
• Persuasive orators. Bernie comes to mind. And Pramila Jayapal.
• Whistleblowers, revealing the truth of the inside game. Wendell Potter would be a fine choice.
• Startling revelations. Perhaps the 100,000 or so who die annually from being un- or under-insured. Not a new fact, but new to the public.
• Compelling witnesses revealing the system’s harm. How about a few of the many thousands who went medically bankrupt?
• A clear villain. Could be the health insurance CEOs making tens of millions of dollars by denying access to care.
• Individuals from the political center or right who speak truths about our health care problems. Like business owners who struggle to insure their employees.
• Exciting video. Perhaps an anguished family who recently lost a loved one due to financial barriers to care. Or the National Mall packed with hundreds of thousands of doctors in white coats, demanding health care justice.

Let’s elevate single payer to a prime-time national event and reveal the truth behind our inexcusable, deadly, and undemocratic health care system.

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Summary: Private equity inroads to clinical practices are both targeted (to especially lucrative activities) and far-reaching (with so many profitable deals to make). However, ethical standards for clinical care and private equity sharply diverge, and this poses serious moral dilemmas for American medicine. We need health care reform in two realms: financing and ownership.

Betting on ‘golden age’ of colonoscopies, investors buy up gastroenterology practices, Fortune, May 27, 2022, by Emily Pisacreta, Emmarie Huetteman, and Kaiser Health News

Private equity, known for making a profit on quick-turnaround investments in struggling businesses across many industries, has taken an increasingly active interest in health care in the past decade. It has invested in gastroenterology practices in recent years to tap into the revenue potential in meeting growing demand.

Tired of having to manage the increasingly complicated business of running a practice and, often, lured by the sweet deals investors offer, more and more doctors have partnered with or even sold their practices to private equity funds. So investment managers now control the financial decisions for many medical offices caring for patients with digestive ailments. With profit the primary driver, patients may find they pay much more for the same—or less—care.

Doctors think, “If I’m going to survive, then I will either have to sell myself to the hospital or, what is the alternative? The alternative is private equity.”

Your Money and Your Life: Private Equity Blasts Ethical Boundaries of American Medicine, Interview of Laura Katz Olson, author of “Ethically Challenged,” Institute for New Economic Thinking, May 18, 2022, by Lynn Parramore

Lynn Parramore: Does private equity belong in medicine at all? Should it be banned?

Laura Katz Olson: This is something I didn’t put in my book, but the conclusion I have come to is yes, we have to ban it. We really need to prohibit, I think, the corporate practice of medicine, period. If you look at the private equity playbook, its only goal is to make outsized profits – they can’t make ordinary profits. If they make ordinary, respectable profits, their investors will go somewhere else because of the risk.

Private equity doesn’t care whether the product is Roto-Rooter or hospice. That’s one of the major differences between PE and a regular company, which may care about the community, the reputation of the company, and the quality of the product. They want to keep their customers. They care about the future. But private equity doesn’t work like that. Because private equity often aims to sell a company after four or five months, they don’t care about the future. They don’t care about the product at all. Private equity is antithetical to our health care system.

So yes, we need to ban private equity from health care. But given that it’s not going to happen, I would say that we need to prohibit the corporate practice of medicine – anybody can make a case for that. You can eliminate their tax advantages. You can limit the debt imposed on companies, especially in the health sector. You could easily control consolidation and monopolies in the health sector. You could use specific anti-trust laws. I would definitely forbid investment by retail customers such as their 401(k)s.

Comment:

By Don McCanne, M.D.

Our very expensive health care system, which should be serving everyone well, is not. There are two particularly important reasons why not. One is our dysfunctional, fragmented health insurance system that leaves so many under-insured or completely uninsured. The other is the increasing shift of wealth to the top, especially enabled by private equity which increasingly is moving health care dollars away from health care and into the creation of personal wealth.

The financing of health care would easily be remedied by the establishment of a bona fide single payer system as described recently in HJM, if we could only negotiate the political barriers.

In an age when “billionaire” has become a commonplace term as deficient wages, homelessness, food insecurity, and other forms of poverty surround us, it is clear that we need to adopt new economic tools to make socioeconomic adjustments that are more equitable. In health care that means doing something about private equity that is moving funds away from health care for the masses and into the coffers of the wealthy.

What about the physician, say a gastroenterologist? When he has built a practice and is ready to retire, should he be able to accept a generous offer from private equity that essentially removes these funds from the health system and the benefit of patients? Or should he be limited to selling his practice to another physician or physician group? For that matter, should he be allowed to sell to a private equity firm and accept a limited partnership thereby drawing off profits that would otherwise go to patient care (if the general partner doesn’t skim off the funds first)? Or should he be able to choose the option of having the private equity firm take over the business management while enjoying the pleasure of practicing pure medicine as he was trained to do (an option that likely would be regretted since private equity managers have mastered how to convert such opportunities into much greater profits for themselves). (Public ownership is another option, but that is a discussion reserved for another day.)

You can see that a significant potential problem is that physicians might be opposed to government control or elimination of private equity if that would remove business options for them while not being convinced, in spite of the overwhelming evidence, of the detrimental effect on their patients.

The HJM on private equity posted last week, based on Laura Katz Olson’s book, “Ethically Challenged,” really made it clear that private equity should have no place in medicine, as she clarifies in the Q & A above. If the private option is eliminated, and the physician is faced with only morally justified choices, what option does he have then?

So the solution to the two problems mentioned is clear: eliminate private equity and establish a bona fide single payer financing system. Though the solution is clear, politics are a challenge. Let’s work hard on meeting that challenge now, immediately, before any more damage is done.

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